The CFPB recently took action against VyStar Credit Union in connection with allegations that the credit union “botched” its rollout of a new online banking system.

In May 2022, VyStar transitioned to a new online banking platform that the CFPB said was dysfunctional because it made it difficult for credit union members to perform basic banking functions for weeks, with some features unavailable for more than six months.

“The new system crashed upon launch because VyStar brought it online prematurely and failed to establish or follow critical processes to ensure its success,” the CFPB said. “VyStar plowed forward to complete the platform conversion process ahead of an unrealistic deadline, despite warnings from its own development team,” the bureau said. “VyStar’s management and governance failures resulted in the virtual banking platform outage and sustained period of limited functionality.”

According to the CFPB, “The platform was taken offline soon after launch. Upon bringing the system back online, the new platform lacked key banking services, some of which were not restored for months.”

The bureau said that families incurred costs as a result of these problems. Credit union members were unable to manage their accounts, were charged late fees when their online bill payments did not go through, and were, in many cases unable to access their funds.

The CFPB’s order requires VyStar to:

• Refund fees to affected consumers. VyStar must ensure that fees charged to members have been refunded, including outstanding third-party fees or costs, including interest costs, imposed on members as a result of the outage.
• Develop contingency plans to minimize the impact that future updates to its banking platform will have on members. Those plans must provide sufficient customer service resources to address consumer problems, and ensure upgrades and maintenance for consumer-facing banking systems are performed in a timely manner.
• Pay a $1.5 million civil penalty to the CFPB’s victims relief fund.

VyStar, formerly known as JAX Navy Federal Credit Union, is a Florida state-chartered credit union headquartered in Jacksonville with 70 branches in Florida and 10 branches in Georgia. VyStar is one of the largest credit unions in the country, with approximately $14.75 billion in total assets and over 980,000 members.

The CFPB has the authority to take action against credit unions with more than $10 billion in assets. The bureau said it worked with the NCUA on the VyStar investigation.

The thoroughness of the review of any new product or service has been a focus for the CFPB. We are continually seeing the CFPB focus on the testing processes relating to technological changes and the impact on consumers of the rollout of new products and technologies.